The Best Method to Use to Value a Firm Under

question 2

Multiple Choice

The best method to use to value a firm under a given capital structure when numerous market imperfections (e.g., agency issues, personal taxes, and transaction costs) exist is the

• A)weighted average cost of capital (WACC)method.
• B)flow-to-equity method.
• C)KISS method.
• D)adjusted present value (APV)method.

---

Definitions:

Disclosure Requirements

Legal obligations mandating parties in certain transactions to provide all relevant information to other parties.

National Highway Traffic Safety Administration

A U.S. government agency responsible for enforcing vehicle performance standards and partnerships aimed at improving road safety.

Recalls Autos

The process by which manufacturers issue a request to return a batch of automobiles due to discovered defects or safety issues.

Consumer Product Safety Commission

A U.S. federal agency responsible for the regulation of the sale and manufacture of consumer products to ensure they do not pose a risk of injury or harm to the public.